SEC NEWS DIGEST

Commission announcements

The Securities and Exchange Commission (Commission) and the Financial Industry Regulatory Authority (FINRA) today issued an investor alert entitled Pension or Settlement Income Streams – What You Need to Know Before Buying or Selling Them.

The investor alert informs investors about the risks involved when selling their rights to an income stream or investing in someone else’s income stream. The alert urges investors considering an investment in pension or settlement income streams to proceed with caution.

Anyone receiving a monthly pension or regular distributions from a settlement following a personal injury lawsuit may be targeted by salespeople offering an immediate lump sum in exchange for the rights to some or all of the payments the person would otherwise receive in future. Typically, recipients of a pension or structured settlement will sign over the rights to some or all of their monthly payments to a factoring company in return for a lump-sum amount, which will almost always be significantly lower than the present value of that future income stream.

“Investors should always learn as much as possible before making an investment decision, and this is certainly true with respect to investing in pension or structured settlement income stream products,” said Lori J. Schock, Director of the SEC’s Office of Investor Education and Advocacy. “This alert will help investors understand the costs as well as the potentially significant risks of these transactions.”

Gerri Walsh, FINRA’s Senior Vice President for Investor Education, said, “Consumers should know that a series of potential pitfalls may greet anyone who is considering selling their rights to an income stream. And any investor who is tempted by the high yield offered by buying the rights to another person’s income stream should know that yield comes with high fees and considerable risks.”

The investor alert contains a checklist of questions before selling away an income stream:

Is the transaction legal? Federal law may restrict or prohibit retirees from “assigning” their pension to someone else.

Is the transaction worth the cost? Find the discount rate that the factoring company has applied to your income stream and compare this rate to alternatives such as a bank loan.

What is the reputation of the company offering the lump sum? Check the factoring company’s record with the Better Business Bureau, and research the firm on the Internet and with a financial professional.

Will the factoring company require life insurance? The factoring company may require you to purchase a life insurance policy, which will add to your transaction expenses and reduce your payout.

What are the tax consequences? The lump-sum payment you collect may be taxable.

The investor alert also warns investors who might be attracted to the yield offered by buying the rights to someone else’s pension or structured settlement to be aware that:

Investors may encounter commissions of seven percent or higher.

Pension and structured settlement income-stream products may or may not be securities and likely are not registered with the SEC.

These products could be difficult to sell if you need money and want to sell the product.

Your “rights” to the income stream you purchased could face legal challenges. (Press Rel. 2013-86)

The Commission today announced that Bruce Karpati, chief of the Enforcement Division’s Asset Management Unit, will be leaving the agency for the private sector after more than a dozen years of federal service.

Mr. Karpati has served at the helm of the Asset Management Unit since its inception in January 2010, overseeing a staff of more than 75 attorneys, industry experts, and other professionals responsible for conducting investigations into investment advisers, investment companies, and private funds.

Mr. Karpati and several colleagues from the Asset Management Unit and other offices received the SEC Chairman’s Award for Excellence in 2012 for their work on the Aberrational Performance Inquiry, which proactively uses performance data to uncover various types of investment fraud by hedge fund managers.

“Beyond all the significant enforcement actions, Bruce has been a pioneer in the use of complex data analysis to detect securities fraud and a pivotal figure in the formation of specialty units within the Enforcement Division,” said George S. Canellos, Co-Director of the SEC’s Division of Enforcement. “His vision and dedication have tremendously benefited the Asset Management Unit and enforcement staff around the country.”

Mr. Karpati said, “I have been privileged to work with such talented and dedicated staff in the Enforcement Division and across the SEC. I am particularly proud of the accomplishments of my colleagues in the Asset Management Unit, who have worked collaboratively on a nationwide basis to bring expertise to bear and proactively combat fraud in the asset management industry.”

During Mr. Karpati’s tenure as chief of the unit, he has overseen investigations of investment advisers for various forms of misconduct involving valuation, performance, conflicts of interest, insider trading, manipulation, derivatives, fund governance, the 15(c) process, disclosure, and compliance and controls.

Mr. Karpati has spearheaded several risk-based initiatives to ferret out misconduct by investment advisers, including the Aberrational Performance Inquiry, Fund Fee Initiative, Revenue Sharing Initiative, and Compliance Program Initiative that specifically focuses on registered investment advisers who repeatedly fail to adopt or implement effective compliance programs.

Among the unit’s enforcement actions brought under Mr. Karpati’s leadership:

SEC charged a major quantitative investment adviser for misleading investors about the impact of a software error.

SEC charged a former $1 billion hedge fund advisory firm and two executives with scheming to overvalue assets under management and exaggerate the reported returns of the hedge funds they managed.

SEC charged a New York-based hedge fund manager and his firm with misappropriating client assets and secretly granting favorable redemption and liquidity rights to certain strategically important investors at the expense of other investors.

SEC charged a hedge fund adviser and separately other hedge fund managers in cases where they misrepresented they had “skin in the game” when in fact they were not personally investing their money in the funds side-by-side with investors.

SEC charged a Bay Area hedge fund manager with concealing investment proceeds in a side pocket to hide profits owed investors, and in a separate case charged Georgia-based hedge fund managers with overvaluing illiquid assets in a side pocket so they could extract excessive management fees based on those asset values.

SEC charged a Malaysia-based investment adviser and a Wall Street firm involved in an illegal mutual fund fee arrangement that repeatedly charged a fund and its investors for advisory services they weren’t actually receiving from a third party.

SEC charged a Scotland-based fund management group for fraudulently using one of its U.S. fund clients to rescue another client, a China-focused hedge fund struggling in the midst of the global financial crisis.

SEC charged two New York-based private equity fund advisers with misleading investors about the valuation policies and performance of a private equity fund they managed.

SEC charged the gatekeepers of two mutual fund trusts for inaccurate disclosures about decisions made on behalf of shareholders.

Mr. Karpati was instrumental in establishing the Asset Management Unit, formulating its strategic and operating plans, setting unit priorities, hiring industry experts, and building the unit’s infrastructure. A hallmark of Mr. Karpati’s tenure was very close coordination with other SEC divisions and offices such as the National Exam Program, the Division of Investment Management, and the Division of Risk, Strategy and Financial Innovation. These collaborations resulted in examination sweeps, rulemakings, and more effective detection of emerging risks.

Mr. Karpati, 43, joined the SEC’s New York Regional Office as an enforcement staff attorney in 2000. He was promoted to branch chief in 2002 and assistant regional director in 2005. In 2007, he founded the SEC’s Hedge Fund Working Group, a cross-office initiative to combat securities fraud in the hedge fund space. Prior to his arrival at the SEC, Mr. Karpati spent four years in private practice at a large national law firm.

Mr. Karpati graduated from Tufts University and the University at Buffalo Law School.

* * *

Following Mr. Karpati’s departure at the end of this week, deputy chiefs Julie Riewe and Marshall Sprung will lead the unit until new leadership is named. (Press Rel. 2013-85)

ENFORCEMENT PROCEEDINGS

In the Matter of Spyridon Adondakis

The Commission announced the issuance of an Order Instituting Administrative Proceedings Pursuant to Section 203(f) of the Investment Advisers Act of 1940, Making Findings, and Imposing Remedial Sanctions against Spyridon Adondakis (Adondakis). The Order finds that from 2006 to 2010, Adondakis was employed as a research analyst at Level Global Investors, L.P. (Level Global), an unregistered investment adviser with offices in Greenwich, Connecticut and New York, New York.

On January 18, 2012, the Commission filed a civil action against Adondakis in SEC v. Adondakis et al., Civil Action No. 12-CV-0409 (S.D.N.Y.). On March 8, 2013, the Court entered an order permanently enjoining Adondakis, by consent, from future violations of Section 10(b) of the Securities Exchange Act of 1934, Rule 10b-5 thereunder, and Section 17(a) of the Securities Act of 1933. The Commission’s complaint alleged that, in connection with the purchase or sale of securities, Adondakis knew, recklessly disregarded, or should have known, that material non-public information he received from multiple tippers was disclosed or misappropriated in breach of a fiduciary duty, or similar relationship of trust and confidence. The Commission’s complaint further alleged that Adondakis provided the material non-public information to others at Level Global, who used that information to execute, and cause others to execute, securities transactions. On April 25, 2011, in a parallel criminal proceeding, Adondakis pleaded guilty to one count of securities fraud and one count of conspiracy to commit securities fraud in violation of 15 U.S.C. §§ 78j(b) and 78ff and 18 U.S.C. § 371 before the United States District Court for the Southern District of New York, in United States v. Spyridon Adondakis, 11-CR-360-JFK-1.

Based on the above, the Order bars Spyridon Adondakis from association with any investment adviser, broker, dealer, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization. Adondakis consented to the issuance of the Order. (Rel. IA-3604; File No. 3-15320)

In the Matter of Jon Horvath

The Commission announced the issuance of an Order Instituting Administrative Proceedings Pursuant to Section 203(f) of the Investment Advisers Act of 1940, Making Findings, and Imposing Remedial Sanctions against Jon Horvath (Horvath). The Order finds that from September 2006 to September 2012, Horvath was employed as a research analyst in the New York office of Sigma Capital Management, LLC (Sigma Capital), an unregistered investment adviser based in Stamford, Connecticut that is an affiliate through ownership of S.A.C. Capital Advisors, L.P., an investment adviser that has been registered with the Commission since 2012.

On January 18, 2012, the Commission filed a civil action against Horvath in SEC v. Adondakis et al., Civil Action No. 12-CV-0409 (S.D.N.Y.). On March 8, 2013, the Court entered an order permanently enjoining Horvath, by consent, from future violations of Section 10(b) of the Securities Exchange Act of 1934, Rule 10b-5 thereunder, and Section 17(a) of the Securities Act of 1933. The Commission’s complaint alleged that, in connection with the purchase or sale of securities, Horvath knew, recklessly disregarded, or should have known, that material non-public information he received from multiple tippers was disclosed or misappropriated in breach of a fiduciary duty, or similar relationship of trust and confidence, and Horvath is liable for the trading by Sigma Capital because he directly or indirectly caused Sigma Capital to place trades and/or unlawfully tipped inside information to Sigma Capital. On September 28, 2012, in a parallel criminal proceeding, Horvath pleaded guilty to two counts of securities fraud and one count of conspiracy to commit securities fraud in violation of 15 U.S.C. §§ 78j(b) and 78ff and 18 U.S.C. § 371 before the United States District Court for the Southern District of New York, in United States v. Jon Horvath, 12-CR-121-RJS-3.

Based on the above, the Order bars Jon Horvath from association with any investment adviser, broker, dealer, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization. Horvath consented to the issuance of the Order. (Rel. IA-3605; File No. 3-15321)

In the Matter of Jesse Tortora

The Commission announced the issuance of an Order Instituting Administrative Proceedings Pursuant to Section 203(f) of the Investment Advisers Act of 1940, Making Findings, and Imposing Remedial Sanctions against Jesse Tortora (Tortora). The Order finds that from August 2007 to April 2010, Tortora was employed as a research analyst at Diamondback Capital Management, LLC (Diamondback), a registered investment adviser based in Stamford, Connecticut.

On January 18, 2012, the Commission filed a civil action against Tortora in SEC v. Adondakis et al., Civil Action No. 12-CV-0409 (S.D.N.Y.). On March 8, 2013, the Court entered an order permanently enjoining Tortora, by consent, from future violations of Section 10(b) of the Securities Exchange Act of 1934, Rule 10b-5 thereunder, and Section 17(a) of the Securities Act of 1933. The Commission’s complaint alleged that, in connection with the purchase or sale of securities, Tortora knew, recklessly disregarded, or should have known, that material non-public information he received from multiple tippers was disclosed or misappropriated in breach of a fiduciary duty, or similar relationship of trust and confidence, and Tortora is liable for the trading by Diamondback because he directly or indirectly caused Diamondback to place trades and/or unlawfully tipped inside information to Diamondback. On May 18, 2011, in a parallel criminal proceeding, Tortora pleaded guilty to one count of securities fraud and one count of conspiracy to commit securities fraud in violation of 15 U.S.C. §§ 78j(b) and 78ff and 18 U.S.C. § 371 before the United States District Court for the Southern District of New York, in United States v. Jesse Tortora, 11-CR-430-WHP-1.

Based on the above, the Order bars Jesse Tortora from association with any investment adviser, broker, dealer, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization. Tortora consented to the issuance of the Order. (Rel. IA-3606; File No. 3-15322)

In the Matter of Sandeep Goyal

The Commission announced the issuance of an Order Instituting Administrative Proceedings Pursuant to Section 203(f) of the Investment Advisers Act of 1940, Making Findings, and Imposing Remedial Sanctions against Sandeep Goyal (Goyal). The Order finds that from July 2007 to January 2012, Goyal was employed as a research analyst at Neuberger Berman LLC, a registered investment adviser based in New York, New York.

On January 18, 2012, the Commission filed a civil action against Goyal in SEC v. Adondakis et al., Civil Action No. 12-CV-0409 (S.D.N.Y.). On March 8, 2013, the Court entered an order permanently enjoining Goyal, by consent, from future violations of Section 10(b) of the Securities Exchange Act of 1934, Rule 10b-5 thereunder, and Section 17(a) of the Securities Act of 1933. The Commission’s complaint alleged that, in connection with the purchase or sale of securities, Goyal knew, recklessly disregarded, or should have known, that material non-public information he received from an employee of Dell, Inc. was disclosed or misappropriated in breach of a fiduciary duty, or similar relationship of trust and confidence, and that Goyal disclosed that material nonpublic information to an individual who worked for a hedge fund with the knowledge that the hedge fund would use that information in connection with its securities trades. On November 3, 2011, in a parallel criminal proceeding, Goyal pleaded guilty to one count of securities fraud and one count of conspiracy to commit securities fraud in violation of 15 U.S.C. §§ 78j(b) and 78ff and 18 U.S.C. § 371 before the United States District Court for the Southern District of New York, in United States v. Sandeep Goyal, 11-cr-935-KBF-1.

Based on the above, the Order bars Sandeep Goyal from association with any investment adviser, broker, dealer, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization. Goyal consented to the issuance of the Order. (Rel. IA-3607; File No. 3-15323)

Delinquent Filer’s Stock Registration Revoked

The registration of the registered securities of The Estate Vault, Inc., has been revoked. It had repeatedly failed to file required annual and quarterly reports with the Securities and Exchange Commission. Thus, it violated a crucial provision of the federal securities laws that requires public corporations to publicly disclose current, accurate financial information so that investors may make informed decisions. The revocation was ordered in an administrative proceeding before an administrative law judge. (Rel. 34- 69542; File No. 3-15292)

INVESTMENT COMPANY ORDERS

The Royal Bank of Scotland plc, et al.

The Commission has issued a permanent order to The Royal Bank of Scotland plc, et al. under Section 9(c) of the Investment Company Act of 1940 (Act) with respect to a guilty plea entered on April 12, 2013, by RBS Securities Japan Limited (Settling Firm) in the U.S. District Court for the District of Connecticut in connection with a plea agreement between the Settling Firm and the U.S. Department of Justice. The permanent order exempts applicants and companies of which the Settling Firm is or becomes an affiliated person from the provisions of Section 9(a) of the Act. (Rel. IC-30509 - May 8, 2013)

Trust for Professional Managers and Aurora Investment Management L.L.C.

An order has been issued on an application filed by Trust for Professional Managers and Aurora Investment Management L.L.C., exempting applicants from Section 15(a) of the Investment Company Act of 1940 (Act) and Rule 18f-2 under the Act, as well as from certain disclosure requirements. The order permits the applicants to enter into and materially amend subadvisory agreements without shareholder approval and grants relief from certain disclosure requirements. (Rel. IC-30510 - May 8, 2013)

SELF-REGULATORY ORGANIZATIONS

Immediate Effectiveness of Proposed Rule Change

A proposed rule change filed by Chicago Board Options Exchange, Incorporated to amend Rule 6.74A (SR-CBOE-2013-048) has become effective pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of May 6th. (Rel. 34-69528)

A proposed rule changed filed by The NASDAQ Stock Market LLC, as modified by Amendment No. 1, to amend fees assessed under Rule 7015(h) (SR-NASDAQ-2013-072) has become effective pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of May 13th. (Rel. 34-69536)

A proposed rule change filed by the EDGX Exchange, Inc. (SR-EDGX-2013-16) relating to amendments to the EDGX Exchange, Inc. Fee Schedule has become effective under Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication of the notice is expected to be made in the Federal Register during the week of May 13th. (Rel. 34-69539)

A proposed rule change filed by the EDGX Exchange, Inc. (SR-EDGX-2013-15) relating to amendments to the EDGX Exchange, Inc. Fee Schedule has become effective under Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication of the notice is expected to be made in the Federal Register during the week of May 6th. (Rel. 34-69510)

A proposed rule change filed by Chicago Stock Exchange, Inc. to consolidate all CHX order types, modifiers, and related terms under one rule and to clarify the basic requirements of all orders sent to the matching system (SR-CHX-2013-10) has become effective pursuant to Section 19(b)(3)(A) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of May 13th. (Rel. 34-69538)

ICE Clear Europe Limited filed a proposed rule change (File No. SR-ICEEU-2013-07) under Section 19(b)(1) of the Securities Exchange Act of 1934 to amend its Delivery Procedures to reflect the clearing relationship for ICE Futures Europe. Publication is expected in the Federal Register during the week of May 13th. (Rel. 34-69544)

Notice of Proposed Rule Change

The Chicago Board Options Exchange, Incorporated has filed a proposed rule change (SR-CBOE-2013-043) relating to Exchange Rule 9.21, “Options Communications.” Publication is expected in the Federal Register during the week of May 6th. (Rel. 34-69535)

Approval of Proposed Rule Change

The Commission has approved a proposed rule change (SR-OCC-2013-03) filed by The Options Clearing Corporation (OCC) under Section 19(b)(2) of the Securities Exchange Act of 1934 to facilitate the use of the Stock Loan/Hedge Program by Canadian Clearing Members. Publication is expected in the Federal Register during the week of May 8, 2013. (Rel. 34-69534)

SECURITIES ACT REGISTRATIONS

The following registration statements have been filed with the SEC under the Securities Act of 1933. The reported information appears as follows: Form, Name, Address and Phone Number (if available) of the issuer of the security; Title and the number and/or face amount of the securities being offered; Name of the managing underwriter or depositor (if applicable); File number and date filed; Assigned Branch; and a designation if the statement is a New Issue.

Amendments to the Registrant's Code of Ethics, or Waiver of a Provision of the Code of Ethics

5.06

Change in Shell Company Status

6.01

ABS Informational and Computational Material.

6.02

Change of Servicer or Trustee.

6.03

Change in Credit Enhancement or Other External Support.

6.04

Failure to Make a Required Distribution.

6.05

Securities Act Updating Disclosure.

7.01

Regulation FD Disclosure

8.01

Other Events

9.01

Financial Statements and Exhibits

8-K reports may be viewed in person in the Commission's Public Reference Branch at 100 F Street, N.E., Washington, D.C. To obtain paper copies, please refer to information on the Commission's Web site at http://www.sec.gov/answers/publicdocs.htm. In most cases, you can view and download this information by using the search function located at http://www.sec.gov/edgar/searchedgar/companysearch.html.